The Million Dollar Question: What is the Value for Money?

Value for Money is on the mind of every government official when implementing public sector projects. Whether it is in developing or developed nations, value for money (VfM) continues to be on the reform agenda. Saving money is a pretty daunting task, especially when country governments have high expenditure costs and rising debts. Lets dig a little deeper on what is VfM and how to improve its strategy.

Effectiveness – delivery of better results while maintaining good quality and reducing expenditures.

How can a government body achieve the ‘3E’s’?

First, from the ‘economy’ point of view, value for money can be achieved when the tender process is transparent and there’s an independent procurement agency enforcing standards and contract award procedures. Carefully choosing resources based on cost analysis also promotes fair and competitive bidding procedures.

The ‘efficiency’ driver in VfM can be enforced with reliable e-procurement technology, such as systems and portals. Investment in capacity building of civil servants and in technology ensures a “smooth functioning rules based system,” states the World Bank.

Lastly, ‘effectiveness’ can be measured by benchmarking good practices of different countries, sharing data through procurement portals, and engaging citizen participation to interact with the information.

So how can a government ensure Value for Money?

On a very basic level, one can prevent corruption by hiring honest civil servants and using efficient procurement systems. Accountability and transparency is enforced by actions of stakeholders and VfM is the best performance-measuring output.